Bond Issuance Still Booming

By Mark Gongloff

Corporate treasurers are picking up the new week where they left off last week: Jamming the corporate debt market with as much new paper as it can stomach.

High-grade corporate borrowers — meaning those not rated “junk” by the rating agencies — issued $25 billion last week, the busiest since late March, Standard & Poor’s Leveraged Commentary and Data group reported this morning.

Makes perfect sense, with high-grade yields near all-time lows at 3.79%, on average. That’s an incredibly low yield — lower than the U.S. government typically borrows money for 10 years at a time. Low Treasury yields and an investor thirst for anything with any shred of extra coupon are driving the boom in issuance.

And because much of the new bond issuance is being used to pay off old debt, it’s not really adding much to net borrowing in the economy, meaning it’s putting no real upward pressure on borrowing costs. It’s the best of all worlds for corporate borrowers.

Today’s crowd of top-notch borrowers, gathered from LCD and other sources, include:

Google, with a $3 billion, three-part offering of three-, five- and 10-year notes. This is Google’s first-ever debt offering, according to Tiernan Ray.

Kellogg, with $400 million of seven-year senior notes

Texas Instruments, with an unknown amount of two-, three- and five-year notes

R.R. Donnelley, with $500 million in seven-year notes — an offering that inspired Fitch to slash its debt rating to junk

Energizer Holdings, with a $600 million offering of 10-year notes

Duke Energy Carolinas, with $500 million in 10-year notes

Burlington Northern Santa Fe, with $750 million of 10- and 30-year notes

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